Come April, you could see a restructuring of your salary package with a retrospective increase in gratuity and leave encashment provision impacting your take-home, and raising compensation costs for companies as the new wage code comes into effect.
Companies, reeling under the Covid impact, are reviewing potential changes in the salary structure by running various models to comply with the wage code and determine compensation costs. Big-ticket components under analysis include a retrospective increase in liabilities for benefit plans, such as gratuity and leave encashment, particularly for organisations where the employee base is long-tenured.
The retrospective increase in gratuity and leave encashment liabilities and additional provident fund (PF) contributions, for instance, may lead to a review of the salary increment budgets for 2021. Provident Fund contributions will increase if organisations adopt the expanded definition of wages as earlier PF was calculated only on ‘basic pay’ and dearness and other special allowances.
Source: The Economic Times
